Public sector lags behind in employees’ social protection

On September 1^st, the first discharge tariff rate increased by 4%.

The announced wage increase in public sector cannot reduce the traditional gap with the average salary in the economy and is offset by growing prices on goods and services. The government lacks resources to continue the old social policy, and will seek to curb real incomes growth.

Conventionally, public sector salaries are among the lowest in the economy. According to the National Statistics Committee, in July 2013 the average monthly wage in education was USD 384, in health care – USD 450, in social services – USD 343, with the average wage in the economy USD 614. The government’s forecast for 2014 suggest that wages in the public sector will be circa 70 % of the average wage in the industry. Consequently, there is an outflow of human resources from the public sector, which will continue into next year.

Even a nominal increase in wages (due to increased first discharge tariff rate by 4%) will not improve the financial situation of public sector employees. As of August 29^th, the prices of bread and bakery products will increase by 10%. On September 1^st, the electricity tariff for the population increased by 12%. Excise tax on gasoline increased by 45 % and on diesel by 70%, which will result in increased costs for individuals and increase the production costs for industrial enterprises. As a result, in the near future prices will rise, including on the consumer goods. In addition, housing and utility tariffs may increase (an increase of 65% is planned for 2014).

The government wants to curb real wages growth. The economy is experiencing considerable difficulties, which results in decreased budget revenues and consequently, in cuts in various state programmes, including social benefits for the population. The state reduces eligibility criteria for receiving social assistance and readjusts its size. In 2014, the Social Security Fund may face a deficit of funds due to continuously deteriorating demographic situation. The government has no extra cash and therefore the level of social protection will be lower.

Public sector workers should realistically assess the feasibility for keeping their workplaces in terms of financial well-being, while the state should be prepared for staff shortages and unfulfilled vacancies in the public sector and should seek additional funds to improve social security protection in the public sector so as not to lose quality of staff.